Foreclosure Activity in Massachusetts – Petitions, Auctions and Deeds all up!

 21st Birthday Flag - 21 straight months of increasing foreclosure activity in Massachusetts

Welcome back to our continuing monthly examination of foreclosure data for Massachusetts.  Petitions have increased year over year now for 21 straight months and with 1 more month to go are up almost 40% above the entire year for 2014.  After a little blip last month with foreclosure deeds being down things are back to the previous couple of months where all 3 metrics went up compared to last year.

Recent Massachusetts Foreclosure Activity:

As a recap there are three items that are tracked for foreclosures which are the petitions (which is the first step for a foreclosure), the actual auctions scheduled and finally the foreclosure deeds, which is where the bank takes the property back at the auction (when nobody else is willing to buy it at the auction).

To start off let’s talk about the petitions, which have now increased from the previous year for 21 consecutive months.  As mentioned previously these are generally pretty large increases which have been by at least double digits every time.  In November they were up a pretty large amount of 41.5% from last year with 910 filed in November 2015 compared to 643 in November of 2014.  This sizable increase is more noteworthy as if there was going to be a month in this span that might not go up this was probably the best candidate.  As we point out every month now, since these have been going up for well over a year these increases are on numbers that were already up, and increases from 2013 to 2014 were often quite substantial.  Last November was actually the largest increase of any month in this span going up 150.2% from November of 2013.  Looking back to November of 2013 there were 257 petitions filed giving an increase for the 2 years of just over 254%. 

Year to date through November petitions are up 50.0% over the same time period in 2014.  As we mentioned a couple months ago there were already more petitions filed in 2015 than all of 2014 through September.  With one more month of data to go we are already almost 39% past all of last year.

Next we will look at are the auction announcements.  The last 2 months we saw fairly big increases over 20% in auctions.  However for the 5 previous months we saw small single digit changes, both up and down.  This month we are back to that more flat range with 586 auctions in November 2015 and 556 back in November 2014 for a 5.4% increase.  Year to date they are up a large amount from 2014 with a 25.6% increase over that time with 6,281 so far compared to 5,000 through November last year.   

Finally we will look at the Foreclosure Deeds.  Deeds were down in October after several consecutive months of increases.  This was a little surprising and they are back to the more expected pattern of increasing.  In November 2015 there were 397 deeds recorded compared to 342 filed in November 2014 giving an increase of 16.1% over last year (Note that in the source article they incorrectly said “decrease” but these are the reported numbers).  For the year to date deeds are up 19.0% compared to 2014. 

What Does This Mean For The Market? :

After the unexpected little blip with deeds going down last month things are back to the expected increases and overall deeds have been going up for a while so banks will be getting more inventory.  As mentioned in several previous reports we do not expect to see any big surge in REOs only because the banks do not want to put a lot of downward pressure on the market by flooding it with their inventory.  However if they keep taking back more properties and will be acquiring many more with all these new petitions, at some point they will need to start putting some of this inventory on the market.  Since foreclosures in Massachusetts can easily be 1 to 1.5 years, and often much more, we are still only starting to see some of this 21 months of climbing foreclosure petitions getting though the system.  Given that is the case there is little reason to not expect a continued increase in the number of completed foreclosures for at least the next 2 years.

REO inventory does seem to be up compared to 6-12 months ago, but still much lower than what we saw in say 2012.  As more of these petitions filed work their way through the system (remember a 1-1.5 year foreclosure in Massachusetts is fairly fast) I expect the number to keep increasing.  When inventory does come on it will weaken the areas around these houses as it will increase inventory overall and these places do tend to sell below non-distressed properties in the area.  Over the last couple of years banks have done more work to places to get a price more along full market value, but unless the places were already in very good shape the bank rehabs are usually unimpressive and do not garner 100% of what a nicely done house gets.  So as these places sell they will generally go for less than similar homes in the area and will pull the overall market in the area down, how much is the real question.

Conclusion:

Since petitions continue to climb each month year over year banks will be getting more inventory back in the coming months, and year.  Since the foreclosure process will generally take well over a year here we should expect foreclosure deeds to stay high for at least the next 2 years or more.  There is still a lot of talk that a lot of this increased activity is clearing up the books from the last crash.  While I am sure that there are some old houses that have just slipped through until now, being a decade removed from the start of the slide in Massachusetts it is hard to believe that a majority of this huge increase in overall foreclosure activity would be attributed to this.  Since sustained increase in foreclosure activity is a leading indicator of a market correction we would recommend being skeptical of predictions of endless growth of real estate markets throughout Massachusetts in the foreseeable future.

To reiterate the advice in our previous articles, if you are thinking about selling a house this year you should consider getting it to market ASAP before these other properties start coming to the market.  If a large number of bank owned places start to come onto the market prices could dip and the days on market could start to increase.  If this happens you may get hit with the tough situation of selling for less than expected while also taking much longer to sell than you had anticipated.  This several markets throughout the region already seeing slower growth, flat growth or even pricing drops this danger is only getting riskier.

 

Do you need to sell your Massachusetts (or New Hampshire ) house fast?  If you would like to sell your home fast and hassle free schedule a consultation with us today.

 

 

All data for this article from The Warren Group:

November 2015 Data:  http://www.thewarrengroup.com/2016/01/foreclosures-starts-rise-41-5-percent-in-november/   

 

 

 

 

 

(Image Credit: 21st Birthday Flag via The Flag Shop)

 

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